RI's positive outlook fragile: Consultant

RI's positive outlook fragile: Consultant

The Jakarta Post, Jakarta

While economic indicators here in the past few weeks have
shown encouraging signs, a senior consultant warned that unless
the government can consistently show a sustained effort in
economic restructuring, the positive outlook would be nothing
more than temporary.

Political risk consultant James Van Zorge said that while
foreign investors have been encouraged by the latest
developments, it remains unlikely that they will consider
increasing their exposure in Indonesia.

Even if the positive momentum is sustained, Van Zorge does not
believe a significant rise in investment till 2003.

"Investment is riven by two factors: sentiment and
fundamentals. Right now the sentiment has improved, but not the
fundamentals," the senior partner at Van Zorge, Heffernan an
Associates said.

In his view under such a situation portfolio investors in
currency and equity markets are likely to be the prime movers,
but foreign direct investors will hold back.

"When the government sends the right positive signals in areas
such as debt management, macroeconomic policy, business policy,
legal reform, and governance...foreign investors will (then)
start to look for and invest in new business opportunities," he
said.

Speaking to reporters here on Tuesday to announce the agenda
of the Indonesia Next executive conference, Van Zorge underlined
the importance of maintaining the current momentum.

"If the government can maintain its momentum, then by early
next year we might see the first signs of any substantial
increase in applications for foreign direct foreign investment."

The Indonesia Next which will be held here on May 22-23.
According to Van Zorge some 40 national and international
speakers will address the meeting.

These include Coordinating Minister for Political and Security
Affairs Susilo Bambang Yudhoyono, the World Bank's Indonesia
country director Mark Baird and Adam Schwarz of McKinsey & Co.